It certainly goes without saying by now, but these are truly strange times. Not just for small businesses, but everyone around the globe is adjusting to this every changing situation. We think daily of the healthcare workers on the front lines, and for people around the globe who will not have the resources to easily bounce back. We know everyone's situation is unique, and we also believe we all have a role to play in staying safe and then doing what we can to return to our new normal. We've all been gifted with something, time to put it to use!
We know coffee so we'll stick with that. Though we are just a small player in a massive industry, we think there's a lot we can do. Every partner we work with employees hundreds of other workers, and there is a massive industry we barely realize exists in coffee producing countries that supports the daily operations of farms across the globe. The ripple effects of a dollar spent multiplies significantly as it reaches all aspects of a supply chain.
You may have caught our live streams last week, our green coffee sourcing partners are doing what they can on the ground, but supply chains are being disrupted left and right. One thing we've been hearing about is a shortage of empty shipping containers. As China and many other countries port "throughput" (TEU) as dropped, containers both loaded and empty are just sitting. A container that could be heading back to another country to be reused may instead be sitting with cargo waiting to get through the port and unloaded. Cargo ships may be idling offshore under quarantine measures. All said, this is a complex system not new to disruptions, but as many coffee producing countries are harvesting and exporting the effect can be magnified in some places.
Coffee farmers and exporters rely on these containers to move coffee throughout the supply chain. It's a complicated system, but whenever a producer can't move coffee, that also means no one can buy the coffee, which also means producers can get hit terribly hard... not just from not selling the coffee, but also not having enough cash flow to plant, maintain, or harvest the next crop. This is just one example, but if it's not shipping containers, it can be a number of other supply chain disruptions like a shortage of migrant harvest workers, or delivery of farming supplies. It's going to be an uphill battle for many and likely without the same economic and medical support that we're used to in the USA.
However, after chatting with our green sourcing partners and farmers directly, it sounds like everyone is ok for the moment. As we all know, it's crazy how fast things can change right now, so who knows how long this feeling of assurance will last. Most of our producers were just ahead of the major disruptions, many have their coffee "on the water" meaning it's on a cargo ship waiting to land at port. Though it's delayed, it works out ok in the short-term as many coffee roasters like ourselves have gone to a fraction of the volume we are used to buying. The supply might be delayed, but so is the demand. Another one of our direct partners, the Schippers' in Guatemala, haven't been able to export yet, but they did get the harvest completed without much disruption. Currently their coffee is being held in "parchment" to await dry milling and export once roasters are buying coffee again. Another contributing variable is that green coffee ages. In the specialty coffee industry we say coffee is best roasted 6-9 months after harvest, so there's always a ticking clock!
In general, if volume picks back up to where it was pre-Corona it would seem things would be ok... however coffee is seasonal. For the most part we don't get to decide when it's harvested and the schedule of growth... so if roasters simply have 2 months of barely any volume, some producers are going to miss out on their coffee being purchased so that the rest of the seasonal schedule can stay on track. Roasters are limited on storage and cash, many simply can't buy and hold the same inventory levels as last season.
What we have done so far at Velodrome is connect with all our partners and have an honest discussion of where we are at, and where they are at. Though we have seen some great growth in volume for Velodrome over q4 2019 and q1 2020, we've only committed to buying just the same volumes as last year. Normally we're happy to buy more and more coffee from each of the producers we work with and new add new partners to the mix each year. We're trying to stay on schedule with everyone's harvest and export schedules. Our priority remains in buying at least the same amount of coffee from all the producers we have standing relationships with around the same time we normally do. Producers and export partners have been generous with us too, many extending payment terms and doing whatever they can to help. We're trusting that doing the right thing will somehow work out. We're all in this together and truly depend on each other's business working.
That being said, if you love coffee and have the means to buy it, support any roaster you can. This is not us pleading for online orders, we're saying support any roaster that you know of that cares about farmers. Buying specialty instant is another great idea, it has a long shelf life! Just talking about supporting local coffee roasters is great too!
Lastly, as I mentioned earlier, we know coffee... so this entire post focuses on our supply chain. However, there's a supply chain for everything you buy! You've probably noticed disruptions on the grocery store shelves, and who could forget the toilet paper shortage! Many of these more local, shorter supply chains are quicker to adjust, but look around at the small businesses you support, many of far reaching, complicated networks in getting their product. Take a moment to understand, educate yourself, find ways to make your dollar reach a little further for people across the supply chain.
- Brice, founder and co-owner Velodrome Coffee Company